In managing production and inventory levels in many product categories, it is desirable to accurately determine unit volumes for each product in a line into the future. Not only is a prediction of future volume levels valuable from production and inventory level standpoints, but such information may be used to adjust product mix and thereby augment profitability. By way of example, in the tire market, tires of various sizes and performance characteristics are produced, each directed to a particular vehicle category within a segmented market. In order to ascertain the unit volumes for each tire size that will be required to meet the needs of the market into the future, a methodology is required to accurately predict future unit volumes for each tire size. Such a methodology should provide short and long term forecasting of every size in the industry and account for not only original equipment vehicle demand but also replacement market demand. Moreover, the methodology should be capable of estimating vitality of the market segments in order to optimize tire line coverage and allow for line adjustments that can enhance profitability.
Heretofore, no integrated methodology has been achieved that can meet the market forecasting needs of a segmented market. Existing methodologies for predicting future unit volume tire demand typically rely primarily on historical demand (sales) data and/or data generated by the OE (original equipment) manufacturers. Such methodologies, however, achieve a less than satisfactory prediction accuracy because they fail to account for changes in vehicle fleet characteristics, vehicle destruction rates, or tire replacement cycles. In addition, existing methodologies fail to provide a means for forecasting tire sizes that do not follow a predictable pattern. For example, certain market segments, such as the “tuner” market, utilize tires in sizes on unpredictable vehicle types. Such usage cannot be predicted by conventional market forecasting methodologies. Such “exceptional” situations within the market cannot be derived from OE derived data since OE data is typically based on conventional vehicle type-to-tire size assumptions.
Accordingly, the industry is in need of a tire market forecasting method for short and long term forecasting every tire size in the industry. The method should adjust for OE and replacement markets for each given size and be capable of utilization in the exceptional case. An acceptable methodology should further be capable of assessing present and future vitality on a market segment or on a selected tire line so as to determine which sizes should be taken out of a line over time in order to enhance overall profitability.